Can You Sell a House With a Reverse Mortgage?

can you sell a house with a reverse mortgage

If you are a homeowner who is considering a reverse mortgage, you may be wondering what happens if you want to sell your home down the line. Navigating the world of real estate and mortgages can be a tricky endeavor, especially when it comes to understanding reverse mortgages and how they impact the sale of a house.

If you’re asking, “Can you sell a house with a reverse mortgage?” You’ve come to the right place. Let’s dive deeper into this topic and shed some light on how you can sell your home with a reverse mortgage in place.

What is Reversed Mortgage?

Before we get into the nitty-gritty, let’s first understand what a reverse mortgage is. A reverse mortgage is a loan that homeowners 62 years or older can take out against the value of their home. It allows them to convert a portion of their home’s equity into cash. The amount of money that can be borrowed depends on the value of the home, the borrower’s age, and interest rates.

This might seem like your typical mortgage, but there’s a twist. In a traditional mortgage, you make monthly payments to the lender. However, in a reverse mortgage, the lender makes payments to you. This can provide a steady stream of income during retirement, hence the term ‘reverse’ mortgage.

Like all financial products, reverse mortgages aren’t without their complexities. They come with their own set of rules, regulations, and potential pitfalls. For instance, the loan becomes due when the borrower permanently moves out, sells the house, or passes away. This means that if you’re looking to sell a house with a reverse mortgage, there are some additional considerations to keep in mind.

Reversed mortgages can be a useful tool for seniors who need extra cash for living expenses or unexpected costs, and it’s important to understand the terms and potential risks before deciding to take out this type of loan.

How Do You Pay Back a Reverse Mortgage?

If you have a reverse mortgage, you may be wondering how you can pay it back. The answer depends on your situation. Repayment of a reverse mortgage typically occurs when the borrower either sells their home or passes away. At that point, the loan balance is paid off using the proceeds from the sale of the home.

However, there are other ways to pay back a reverse mortgage if you choose to do so. Some borrowers choose to make monthly payments on the loan while they are still living in the home. This can help reduce the loan balance and the amount owed when the loan is eventually repaid.

Another option is to refinance the reverse mortgage into a traditional mortgage. This can be a good option if you want to keep your home but need to lower your mortgage payments. However, it’s important to note that refinancing can be expensive and may not always be the best option.

Ultimately, the decision of how to pay back a reverse mortgage is a personal one that depends on your circumstances. Speak with a mortgage professional to determine the next step.

Can You Sell a House With a Reverse Mortgage

Now, onto the main question at hand. Can you sell a house with a reverse mortgage? The answer is a resounding yes! The process is similar to selling a house with a conventional mortgage. However, there are some additional steps involved.

When you sell a house with a reverse mortgage, the first thing you’ll need to do is pay off the reverse mortgage loan balance. This is typically done using the proceeds from the sale of the house. If your house sells for more than what you owe on the reverse mortgage, then the surplus is yours to keep. On the other hand, if it sells for less than what you owe, you won’t have to worry. Most reverse mortgages are “non-recourse” loans. This means that you (or your heirs) won’t be responsible for paying the difference.

Preparing Your Home for Sale

To attract potential buyers and secure the best possible sale price, it’s important to prepare your home for sale. Your broker will provide valuable recommendations on staging, repairs, and enhancements that can make your home more appealing to buyers. By following their advice, you can increase the chances of a successful sale.

Marketing and Showcasing Your Home

Once your home is ready to be listed, your real estate broker will create a comprehensive marketing strategy to showcase its best features. They will leverage their expertise in digital marketing, photography, and other promotional techniques to attract interested buyers. Throughout the process, they will keep you informed about showings, feedback from potential buyers, and any necessary adjustments to the marketing strategy.

Navigating the Offer Process with Your Real Estate Broker

Once offers start rolling in, your real estate broker will be there to help you navigate the negotiation process. They will assist you in evaluating offers and negotiating favorable terms to ensure your interests are protected. Once an agreement is reached, they will facilitate the closing process, working closely with the reverse mortgage lender, title company, and other parties involved.

How Long Do You Have to Sell a House With a Reverse Mortgage?

selling reverse mortgage home

Once the borrower of a reverse mortgage permanently moves out or passes away, the clock starts ticking on repaying the loan. Generally, you or your heirs have about six months to sell the house and pay off the reverse mortgage.

How long do you have to sell a house with a reverse mortgage depends on a few factors, including the terms of your reverse mortgage agreement and your circumstances. Generally speaking, you can sell your home at any time with a reverse mortgage, as long as you can pay off the outstanding balance of the loan.

Ultimately, if you are selling a house with a reversed mortgage, carefully review your agreement and consult with a financial advisor to determine the best course of action.

Key Considerations When Selling Reverse Mortgage Home

Though selling reverse mortgage home isn’t drastically different from selling a traditional mortgaged home, there are a few key points you should keep in mind:

  • Inform your lender: As soon as you decide to sell, let your lender know. They will provide you with a payoff quote and guide you through the process. This ensures that there are no surprises along the way.
  • Get an appraisal: Knowing how much your home is worth is crucial to setting a fair selling price. Hiring a professional appraiser can give you an accurate valuation of your home.
  • Understand the payoff process: The proceeds from the sale of your home will first go towards paying off the reverse mortgage. After that, any remaining funds will go into your pocket. It’s important to understand this process to manage your expectations accordingly.
  • Make necessary repairs and improvements: Before putting your home on the market, consider making any necessary repairs or improvements to increase its value. This can include fixing leaky faucets, repainting walls, or updating outdated features.
  • Hire a real estate broker: A good real estate broker can help you navigate the selling process and provide valuable insights on pricing, marketing, and negotiating with potential buyers.
  • Set a realistic price: While it may be tempting to price your home high, it’s important to set a realistic price based on the current market conditions and the value of your property. Your real estate broker can help you determine a fair price.
  • Stage your home: Staging your home can make it more attractive to potential buyers. This can include decluttering, rearranging furniture, and adding decorative touches.
  • Market your home: Your broker can help you market your home through online listings, open houses, and other advertising methods. Branding your home in the best possible light is important to attract potential buyers.

What Are The Perks of Selling A House With a Reversed Mortgage

Selling a house with a reversed mortgage can come with several perks. One of the main benefits is that the proceeds from the sale can be used to pay off the remaining balance of the mortgage. This means that the seller can walk away from the transaction with no mortgage debt, freeing up their finances for other expenses.

Another perk of selling a house with a reversed mortgage is that the seller can retain any remaining equity in the property. This is because the amount owed on the reversed mortgage cannot exceed the value of the home at the time of sale. Therefore, if the home has appreciated since the reversed mortgage was taken out, the seller can keep any additional equity.

Selling a house with a reverse mortgage can also be a good option for those who no longer want to continue living in the property. The seller can use the proceeds from the sale to downsize or move into a more suitable home.

Overall, selling a house with a reverse mortgage can provide financial flexibility and peace of mind.  It is important to consult a financial advisor or a real estate professional to determine if this option is right for you.

Working With The Right Professional Can Make All The Difference

Selling a house with a reverse mortgage can be overwhelming, but having the right professionals by your side can make all the difference. Consider working with a broker who has experience in these types of sales. Additionally, it’s always a good idea to consult with a professional before making any major financial decisions. They can help you understand the potential impact on your financial plan before making an informed decision.

By working with a real estate broker who specializes in working with seniors and is knowledgeable about reverse mortgages, you can ensure a smoother and more seamless experience. They will guide you through the entire process, from start to finish, and provide invaluable insights and advice tailored to your unique situation.

Wrapping Up

So, can you sell a house with a reverse mortgage? The answer is yes, you can!

Selling a home with a reverse mortgage may seem daunting, but with the right professionals by your side, it can be a smooth and successful journey. By working with a broker who is familiar with this area, you can confidently navigate the complexities and achieve your desired outcome. Remember, you don’t have to go through this process alone. Reach out to a knowledgeable professional today and take the first step towards a successful sale.

Need more information or advice on reverse mortgages? Our team of experts is always here to help. We can provide you with the right loan solutions tailored to your real estate investment goals. Don’t hesitate to reach out to us. Let us help you turn your dreams into reality. 

Q&A

Who owns the house with a reverse mortgage?
When you take out a reverse mortgage, you still own your home. However, the lender has a lien on the property, which means they have an interest in the home until the loan is repaid. This lien is typically paid off when the home is sold, and any remaining equity belongs to the homeowner or their heirs.

Can you get cash out with a reverse mortgage?
One of the benefits of a reverse mortgage is that you can access your home’s equity without having to sell your home. You can receive the loan proceeds in a lump sum, line of credit, or monthly payments. This means that you can get cash out with a reverse mortgage, which can help cover expenses in retirement.

Can a reverse mortgage be a second mortgage?
A reverse mortgage can be a second mortgage if you still have an existing mortgage on your home. However, the reverse mortgage must be used to pay off the first mortgage before you can access any remaining equity.

Can a reverse mortgage be a good thing?
For some homeowners, a reverse mortgage can be a good thing. It can provide a source of income in retirement, allowing you to stay in your home and maintain your lifestyle. However, it’s important to understand the pros and cons of a reverse mortgage before you decide if it’s right for you.

How long do you have to sell a house with a reverse mortgage?
If you decide to sell your home with a reverse mortgage, you have a few options. You can sell the home and use the proceeds to pay off the reverse mortgage, or you can use other funds to pay off the loan and keep the home. You typically have six months to repay the loan after the last borrower has left the home.

What is the 95% rule on a reverse mortgage?
The 95% rule on a reverse mortgage states that you can borrow up to 95% of your home’s appraised value, minus any outstanding liens or loans. This means that if your home is worth $500,000 and you have a $100,000 mortgage, you can potentially borrow up to $345,000 with a reverse mortgage.

What happens at the end of a reverse mortgage?
At the end of a reverse mortgage, the loan must be repaid. This can happen when the homeowner moves out of the home, passes away, or sells the home. If the loan balance is higher than the home’s value, the lender is typically paid the full value of the home, and any remaining debt is forgiven.

Brenna Carles

Brenna Carles

I help people who want a place to call their home, where memories can be made, and stories to be shared. Where i can help clients build generational wealth for years to come. I provide the perfect combination of southern hospitality and relentless knowledge and passion for mortgage lending as if you were family.